May 24, 2012

RESPONSE OF THE OFFICE OF CHIEF COUNSEL
DIVISION OF INVESTMENT MANAGEMENT

IM Ref. No. 20124301731
File No. 811-04347

Your letter dated May 24, 2012 requests our assurance that we would not recommend enforcement action to the Securities and Exchange Commission (the “Commission”) under section 6(b) of the Securities Act of 1933 (the “1933 Act”), section 24 of the Investment Company Act of 1940 (the “1940 Act”) or rule 24f-2 thereunder, against GMO Trust, an open-end management investment company registered under the 1940 Act, if GMO Trust calculates and pays its registration fees pursuant to rule 24f-2 in the manner described in your letter.

You state the following: GMO Trust and GMO Series Trust each are registered as open-end, management investment companies under the 1940 Act. Each series of GMO Series Trust is a feeder fund (each a “GMO Feeder Fund” and collectively, the “GMO Feeder Funds”) in a master-feeder fund structure. Each GMO Feeder Fund invests substantially all of its assets in a corresponding series of GMO Trust (each a “GMO Master Fund”). Shares of each GMO Master Fund and shares of each GMO Feeder Fund are registered under the 1933 Act. Each GMO Feeder Fund is a conduit for investment in the corresponding GMO Master Fund, and under normal circumstances, each GMO Feeder Fund will invest at least 95% of its assets in shares of its corresponding GMO Master Fund with any remaining assets being held as cash. You propose that GMO Trust exclude the net sales price of shares of each GMO Master Fund sold to the corresponding GMO Feeder Fund when calculating GMO Trust’s “aggregate sales proceeds” in Item 5(i) of Form 24F-2. You assert that permitting such calculation and payment is consistent with the purposes of section 24(f) and rule 24f-2 thereunder.

LEGAL ANALYSIS

Section 6(b) of the 1933 Act generally requires a registrant to pay to the Commission a fee to register the securities it proposes to offer. Section 24(f) of the 1940 Act and the rules thereunder modify the 1933 Act registration provisions for certain registered investment companies. Section 24(f) of the 1940 Act, in relevant part, provides that an open-end management company shall be deemed to have registered an indefinite amount of securities upon the effective date of its registration statement and shall pay a registration fee based on the aggregate sales price for which the company’s securities were sold pursuant to a registration of an indefinite amount of securities under section 24(f)(2) during the previous fiscal year, which is then reduced by the aggregate redemption or repurchase price of the securities of the company during that year and by the aggregate redemption or repurchase price of any securities of the company that were not used in prior years. Rule 24f-2 requires that any open-end management company file a Form 24F-2 accompanied by a registration fee not later than 90 days after the end of any fiscal year during which it has publicly offered its securities.

You argue that GMO Trust should be able to exclude the net sales price of shares of each GMO Master Fund sold to the corresponding GMO Feeder Fund when calculating its “aggregate sales proceeds” in Item 5(i) of Form 24F-2. You assert that this would prevent the payment of rule 24f-2 registration fees for the same aggregate proceeds from investors in each GMO Feeder Fund, thereby avoiding “double counting” of assets on which such registration fees are paid.1 In support of your request, you note that the Commission has taken analogous positions concerning the payment of 24f-2 registration fees with regard to certain two-tier conduit arrangements.2

Based on your facts and representations, we would not recommend enforcement action to the Commission against GMO Trust under section 6(b) of the 1933 Act, section 24 of the 1940 Act, or rule 24f-2 thereunder, if GMO Trust calculates and pays 1933 Act registration fees pursuant to rule 24f-2 under the 1940 Act based on all of its sales and redemptions of securities during its previous fiscal year except for sales to and redemptions from the GMO Feeder Funds that issued securities on which registration fees were paid to the Commission pursuant to Section 6(b) of the 1933 Act.3

Our position is based particularly on your representations that:

GMO Trust and GMO Series Trust each are registered as open-end, management investment companies under the 1940 Act;

Shares of each GMO Master Fund and shares of each GMO Feeder Fund are registered under the 1933 Act;

Each series of GMO Series Trust is a feeder fund in a master-feeder fund structure;

Each GMO Feeder Fund is a conduit for investment in the corresponding GMO Master Fund; and

Each GMO Feeder Fund invests substantially all of its assets in a corresponding series of GMO Trust. Under normal circumstances, each GMO Feeder Fund will invest at least 95% of its assets in shares of its corresponding GMO Master Fund with any remaining assets being held as cash.4

This response expresses our view on enforcement action only and does not express any legal or interpretive position on the issues presented. Because our position is based upon all of your facts and representations, any different facts or representations may require a different conclusion.5

Michael S. Didiuk
Senior Counsel

1 You state that each GMO Feeder Fund will calculate and pay rule 24f-2 registration fees on an annual basis.

2 Specifically, instruction C.3 of Form 24F-2 provides for the exclusion from an issuer’s aggregate sales price (reported in Item 5(i) of the Form) the sales price of shares sold to a unit investment trust (“UIT”) that offer interests that are registered under the 1933 Act and on which registration fees have been, or will be, paid. The instruction further provides, however, that an issuer excluding the sales price of these shares from its aggregate sale price may not use shares redeemed or repurchased from these UITs for purposes of determining the redemption or repurchase price reported in Items 5(ii) and 5(iii) of the Form. See also Registration Fees for Certain Investment Companies, Investment Company Act Rel. No. 21332 (Sept. 1, 1995) and Registration Under the Securities Act of 1933 of Certain Investment Company Securities, IC-22815 (Sept. 12, 1997) (“1997 Adopting Release”) (discussing rationale for expanding scope of instruction C.3 to prevent “double payment” of registration fees for certain two-tier conduit arrangements).

3 In accordance with instruction C.3 of Form 24F-2, if GMO Trust does not include sales to a GMO Feeder Fund, it will not use shares redeemed or repurchased from that GMO Feeder Fund for purposes of determining the redemption or repurchase price reported in Items 5(ii) and 5(iii) of the Form.

4 See 1997 Adopting Release, supra note 2, at n. 16 and accompanying text (the Commission “is not adopting … [a] suggestion that the instructions permit exclusion of the value of fund shares sold to a management investment company in a ‘fund-of-funds’ arrangement” because “a management company in a fund-of-funds arrangement does not act as a conduit for investments in the other funds.”).

5 This letter confirms the position that the staff provided orally to Kenneth R. Earley of Grantham, Mayo, Van Otterloo & Co. LLC, adviser to GMO Trust and GMO Series Trust, on March 29, 2012.